Whither Westlaw and Lexis?

I spoke last week at a LLAGNY (Law Librarians of Greater New York) event on "Current Awareness Tools for the Law Librarian". Joining me were representatives of Portfolio Media (Law 360) and LawyerLinks Advantage.

NOT joining me were representatives of Westlaw and Lexis. I thought this was of profound interest, and offered some thoughts on their absence at the event as a preface to my remarks.

Westlaw and Lexis are multi-billion dollar companies that dominate the legal publishing landscape. Both companies employ thousands of people, and are known for their comprehensive legal publishing offerings, high prices, and aggressive service - which includes free access for law students, the awarding of points redeemable for awards for frequent searching, and a prowling omnipresence within the libraries and corridors of major law firms.

The day before, I attended an open house for lawyers at a major New York firm where my company and Portfolio Media sat alone amongst the big trees in the forest. Westlaw Business was there, alongside brethren from the real Westlaw, and RIA (another Thomson company). Lexis was also there (with three sales people!). So was Bloomberg - that's a story for another day - and Wolters Kluwer (CCH and Aspen).

Not many attorneys actually attended the event, and those who did were there with specific questions. I did not notice that the big guys received any more attention than we did. In fact, they may have received slightly less notice.

At the LLAGNY meeting, I noted the absence of Westlaw and Lexis and suggested that it was meaningful that they were not invited to address "current awareness tools for the law librarian". There are several issues at stake here. Thomson just bought Reuters and it would make sense for them to use Reuters news to build-out a world-class news and current awareness product for legal professionals. Lexis has made good use of Ozmosys to deliver and channel its sophisticated array of news and current awareness materials. So why weren't they invited to speak?

I think there are two forces at work here, neither of which bodes well for the future growth of these two companies. One is political. Despite their omnipresence, and the generally high quality of their products and services, for many users, Westlaw and Lexis seem to be tolerated, not loved. As large and powerful organizations - easier to respect than to cuddle - the reasons are not difficult to identify, and they probably parallel ambivalence about a powerful software company that inspires mixed emotions with which we are intimately familiar out here in Seattle.

I can certainly imagine how, in the minds of many librarians, who have to manage budgets and deal with vendors, Westlaw and Lexis would be viewed as necessary evils. Borg-like in their capacity to absorb and assimilate all other legal publishing "life forms", their market power has survived numerous antitrust challenges. Their prices - in many instances for information that largely exists elsewhere and possesses commodity status - are very high. And the two companies can be difficult and complicated to deal with. So librarians, knowledge managers, and attorneys may suffer from a lack of influence and control in vendor relationships that are largely asymmetric.

From my experience at the LLAGNY event, however, the other major force in play, however, is cognitive, and it may cut against the grain of the political, "resistance is futile" Borg analogy. If LLAGNY invites three tiny companies, but not Westlaw and Lexis, to present at a session on "current awareness", it may only be a gesture of politesse, in which smaller entities are singled out for consideration out of a commendable generosity of spirit on behalf of "the little guy".

On the other hand, it may also represent some recognition that the future of legal research and current awareness products (which will increasingly be merged) may not belong to the large players, and that the Internet presents new options for flexible, lightweight, reasonably priced products that obviate the need or requirement to use Westlaw or Lexis. In other words, a cognitive shift may be taking place in which Westlaw and Lexis increasingly are not the default options when it comes to legal research.

Here is the situation in a nutshell. Westlaw and Lexis currently face the classic “innovator’s dilemma” associated with established market leaders that find themselves pinned down by commitments to overdeveloped, overpriced products in rapidly changing markets. When faced with the emergence of vibrant new companies in this legal publishing and tools markets, both companies historically have employed an aggressive acquisitions strategy that (Borg-like) has allowed them to both incorporate the latest publishing and technology advances and fend off new competition, leaving a strangely barren and misshapen ecosystem in which two towering redwoods absorb the roots system of any sapling that threatens to surpass knee-high stature.

Will this change in the future? My guess is a qualified "yes." Westlaw and Lexis are both very profitable enterprises, and they can obviously afford to throw enough money at any company whose business they want to essentially "make resistance futile". And yet, there is a point at which the complexity of their businesses, and the pressure of the "innovator's dilemma" may present more nimble competitors with growth opportunities to which Westlaw and Lexis are simply unable to respond. Their position is not unlike that of Microsoft around 2004, just before Google went public. People knew change was in the air and that it would deeply impact Microsoft, probably in a negative way. The form it would take remained unclear, however.

While still very profitable, Westlaw and Lexis revenue growth rates now hover in the range of only 8 percent to 10 percent annually. Both companies face serious competition across many business fronts. I predict that in the next 3-5 years, new companies and business models will arise in the world of legal publishing and legal practice that will directly challenge the central position of Westlaw and Lexis in the online publishing ecosystem.

What to you think? Please send your thoughts and responses to me at pschwartz@knowledgemosaic.com, and I will be sure to publish them on the Blogwatch in the next few days.

By the way, I was very taken with the idea of mellifluously titling this post Whither Wexis, but given that Reed Elsevier (parent company of Lexis) slapped a court case and a permanent injunction against TheLaw.net for referring to "Wexis" in its marketing literature, I decided that would not be advisable. This is another fascinating story. For the sordid details.